ITC Q3 standalone net up 21 at Rs 2,051.85 cr

SummaryThe company had posted a net profit of Rs 1,700.98 crore in the same period last fiscal.

Diversified group ITC today reported a 20.62 per cent rise in its standalone net profit at Rs 2,051.85 crore for the third quarter ended December 31, 2012 on the back of strong performance in cigarettes, agri and paper businesses.

The company had posted a net profit of Rs 1,700.98 crore in the same period last fiscal, ITC said in a filing to the BSE.

Net sales during the period under review stood at Rs 7,627.07 crore, up 23.1 per cent from Rs 6,196.43 crore in the corresponding period last financial year.

The total FMCG net revenue during the quarter stood at Rs 5,440.06 crore with the cigarettes category accounting for Rs 3,657.36 crore.

Paper, paperboards and packaging business clocked net revenue of Rs 1,061.55 crore in the third quarter. Hotels segment had a net revenue of Rs 309.46 crore, while the agri business posted net sales of Rs 1,630.97 crore.

During the period, the company said its cost of materials consumed increased to Rs 2,374.48 crore against Rs 1,946.22 crore in the year-ago period.

ITC scrips were trading at Rs 287.50 per share, in the afternoon trade, up 0.82 per cent from the previous close on the BSE.

Higher taxes and tighter anti-smoking regulations in several Indian states have impacted sales of the company, which makes four out of every five cigarettes sold in India.

Cheaper smokes improved volume growth by 2-3 percent after a marginal increase of 0.4 percent in the previous quarter, according to three analysts briefed by the company. ITC does not provide details of sales volumes in its earnings statements. "The cigarette industry in India continues to be impacted by a discriminatory taxation and regulatory policy framework, the company said in a statement.

"The high incidence of tax on cigarettes has created tax arbitrage opportunities leading to the growth of illegal cigarettes in the country. Consequently, legal industry volumes have come under severe pressure," the statement said.

ITC, which is 30.8 percent owned by British American Tobacco PLC, generates about half its revenue from cigarettes. The company also owns hotels and makes products including soap and shampoo. It said net sales from its non-cigarette consumer business grew 30 percent to 17.8 billion rupees.

"The non-cigarette business has shown a good jump. This is a good sign because the company has been focusing heavily on diversification," said Naveen Trivedi, an analyst with Karvy Stock Broking Ltd. in Mumbai.

Shares in ITC, a staple for fund portfolios that consider it recession-proof, rose as much as 1.6 percent after the results, after falling more than 10 percent in the past month.